Where to Report Excess Contributions to HSA?

If you have made excess contributions to your HSA (Health Savings Account), you should take the necessary steps to report and correct this mistake. Here's what you need to know:

Excess contributions occur when you or your employer deposits more money into your HSA than the annual contribution limit set by the IRS. This can happen accidentally or due to misinformation about the contribution limits.

Here are the steps to report excess contributions to your HSA:

1. Identify the excess contribution amount: Calculate the difference between the total amount contributed and the annual contribution limit.
2. Withdraw the excess amount: You must withdraw the excess contributions, along with any earnings generated by those contributions, by the tax filing deadline for the year in which the excess contribution was made.
3. Report the withdrawal: When you file your taxes, report the withdrawal of the excess contributions on IRS Form 8889. You will also need to include any earnings from the excess contributions on your tax return.
4. Pay the penalty: If you do not withdraw the excess contributions in time, you may be subject to a 6% excise tax on the excess amount.

It's essential to be proactive in correcting excess contributions to your HSA to avoid penalties and tax implications. Consult with a tax advisor or financial professional for guidance on how to handle excess contributions properly.

It's important to stay aware of your contributions to your HSA, as excess contributions can lead to unexpected fees. If you find that you've deposited more than the IRS annual limit, it's crucial to address this quickly to ensure you're not subject to penalties.